Britain believes it has chosen the ideal moment to throw its weight behind a financial innovation that might help save the world. As part of Prime Minister Boris Johnson’s blueprint to fight the climate emergency, the U.K. is exploring the creation of a London-based international market in carbon offsets, carbon credits and derivatives linked to emissions-cutting investments.
The plan sounds noble. Should it really take off, you might even be able to reduce your personal emissions by buying an offset when you do environmentally damaging things like fill up your car with gas, or buy a cup of coffee. But betting on this utopian-sounding outcome would be premature.
After many previous efforts to spur carbon trading failed amid a lack of clear government policy, this might be one of the better chances to get a market going. Companies that struggle to cut their own carbon footprints could certainly do with a deep, liquid pool of credits they can buy to help them satisfy the demands of increasingly green investors. Xi Jinping’s announcement that China aims to reach carbon neutrality by 2060 and President-elect Joe Biden’s push for a net-zero economy by 2050 could give any embryonic market a jolt.